Announcement

FLLYR: BGP: Full Year Results Announcement 01:37pm 
BGP
16/03/2020 13:37
FLLYR
PRICE SENSITIVE
REL: 1337 HRS Briscoe Group Limited

FLLYR: BGP: Full Year Results Announcement

BRISCOE GROUP LIMITED
Results for announcement to the market
Reporting Period: Full-Year 28 January 2019 to 26 January 2020
Previous Reporting Period: Full-Year 29 January 2018 to 27 January 2019
Currency: New Zealand Dollars

Amount (000s); Percentage change

Total revenue
$653,017 +3.3%

Net profit
$62,583 -1.3%

Final Dividend
Amount per share: $0.12500000
Imputed amount per share: $0.04861111
Record date: 23 March 2020
Payment date: 31 March 2020

Net tangible assets per share
Current period: $1.3892
Prior comparable period: $1.2230

Full Year Review

Briscoe Group Limited (NZX/ASX code: BGP)

Highlights for the full year ended 26 January 2020:
o Total sales $653.0 million, +3.34%
o Same store sales growth, +2.04%
o Gross profit $257.5 million, +1.64%
o Gross profit margin 39.43% vs 40.09% last year
o Online sales growth, +16.20%
o Full year NPAT (before NZ IFRS 16 adjustment) $65.0 million, +2.54%
o Final Dividend 12.5cps, increase from 12.00cps last year, +4.17%
o Total Dividend 21.0cps, increase from 20.0cps last year, +5.00%

Rod Duke, Group Managing Director, said: "We are pleased to announce record
sales, an increased final dividend payment and, what would have been, another
record profit for Briscoe Group except for the accounting adjustment the
company was required to make in relation to the new leases accounting
standard (see below). To achieve such results despite the ongoing
competitiveness and widely reported difficulties faced by many retailers, is
a commendable result."

The earnings were generated on sales revenue of $653.0 million, an increase
of 3.34% on the $631.9 million generated for the previous year.

Gross Margin dollars increased 1.64% for the period with gross margin
percentage decreasing from 40.09% to 39.43%. The decreased gross margin
percentage reflects the continued intensity of competition across the
retailing environment.

Rod Duke, said: "As we commented in February, the concentration of sales
around Black Friday promotions is increasingly influencing the traditional
steady build through to Christmas. New behaviours in customers continue to
emerge and we are excited by the strategic initiatives the team is developing
in response. We operate in highly competitive markets, and while major
event-based campaigns are critical, customers are also constantly looking for
more resourceful and new ways to shop with us. This is a demanding time for
retailers but we also see it as an exciting next phase of our ongoing
development."

In addition to the competitive trading environment, the full-year reported
bottom line, as was the case for the half-year, will be impacted by the
introduction of the new international accounting standard in relation to the
treatment of leases (NZ IFRS 16). The effect on the Group's income statement
will be to lower the NPAT in comparison to the NPAT which would have been
reported under the previous accounting treatment. The impact of this change
will be $2.4 million and result in a reported NPAT of $62.58 million for the
year (52 weeks) ending 26 January 2020. It is important to note that the
impact of NZ IFRS 16 has no cash effect to the Group and is for financial
reporting purposes only (see tables below for more detail in relation to the
impacts of the new standard).

The 2019/20 NPAT includes dividends received of $6.8 million from the Group's
shareholding in Kathmandu Holdings Limited. In addition, $2.7 million was
received for rights entitlements not exercised as a result of the Group's
decision to take up only half of its entitlement in relation to Kathmandu's
capital raising process associated with their acquisition of the Rip Curl
business. Mr Duke said, "Including the $13.6 million additional investment
made this year, the total cost of our investment in Kathmandu is now $87.9
million and represents a 16.3% shareholding. The Board considers the level of
investment to be at an appropriate level and as the largest single
shareholder we continue to maintain a close interest in the company."

In addition to the additional investment in Kathmandu, $19.2 million of
capital investment was made by the Group during the year of which $10.1
million represents predominantly development of property owned by the Group.
The balance of capital investment was for the fit-out of new and relocated
stores, online platform improvements, security system upgrades and
enhancements to system software and hardware.

Inventories totalled $87.4 million at year-end, $6.4 million higher than the
$81.0 million reported for last year, predominantly reflecting the impact of
the three new stores opened by the Group during the year, the increased
demand for online shopping as well as a higher mix of imported inventory this
year compared to last year's year-end position.

The store development programme progressed well throughout the year. During
the first half, following earthquake strengthening works, both the Briscoes
Homeware and Rebel Sport stores in New Plymouth underwent full
refurbishments.

Projects continued at pace during the second half of the year lead by the
completion of the Group's new Support Office at 1 Taylors Road, Auckland with
the full support team relocated by the end of August. Rod Duke said, "It's a
brilliant space and wonderful to have the full support team together in one
location."

In September the existing Briscoes Homeware store at 36 Taylors Road was
relocated to retail space on the ground floor of the new Support Office
building. This now allows for a complete rebuild on the existing site for
which siteworks have recently commenced.

September also saw the opening of a new Rebel Sport store in Newmarket,
Auckland as part of the exciting new Westfield retail redevelopment. This
store reflects a contemporary fit-out and design, parts of which will be
replicated in future new and refurbished Rebel Sport stores.

The opening of new Briscoes Homeware and Rebel Sport stores - including
online fulfilment centres, in Mt Roskill during October were welcome
additions to the Group's Auckland network. In addition to these new stores,
the existing Briscoes Homeware store at Riccarton, in Christchurch was
relocated to a new site on Riccarton Road and an extension and full
refurbishment of the Tauranga Briscoes Homeware store was completed.

The Group's online channels continued to experience strong growth finishing
the year 16% up on the previous year and now represents just over 11% of
total Group sales. Rod Duke said, "We will continue to focus on our online
offering while maintaining our proven strategy of adding stores to our
network as and when we identify opportunities. The rollout of our 'Click and
Collect' offering will continue in the current year enhancing the way we
engage with customers across both the online and physical store channels.

"New Zealand retailing remains highly competitive and sensitive to continued
cost and margin pressures, an unpredictable New Zealand dollar, subdued
consumer and business confidence as well as the increasing significance of
the COVID-19 (coronavirus) issue - all of which will make it difficult for
retailers to maintain margins. However, notwithstanding these headwinds, we
are confident that we have the right programmes and initiatives in place to
leverage opportunities to grow the business and deliver the experience and
value to our customers to ensure that we continue to be the first choice for
homeware and sporting goods in New Zealand."

Group Chair Dame Rosanne Meo said, "This year's results emphasise the Group's
ability to perform and deliver improved performance in difficult trading
conditions. On behalf of the Board, I would like to acknowledge the great
work done by all staff to maintain Briscoe Group's status as New Zealand's
top homeware and sporting goods retailer.

In relation to the economic and social impact of the Government's border
control announcements in the last two days and with the broader economic
package still outstanding, we are not underestimating the challenges we will
face as an employer and as a business. It is a complex outlook, but we feel
that we are as well placed as any retailer to respond to our customers'
ongoing and changing needs."

Rod Duke this morning announced that in response to the growing economic
uncertainty surrounding COVID-19 (coronavirus) that he will be taking no
salary at all through until at least the end of July. He said, "I'm
particularly proud of how the team is facing the challenge ahead. I met this
morning with the senior management team who unanimously agreed to a freeze on
their salary increases for the same period. We continue to monitor the
situation closely, taking steps to help protect our team and customers and to
mitigate interruption to our business."

Dame Rosanne announced that the directors have resolved to pay a final
dividend of 12.5 cents per share (cps). The dividend is fully imputed and,
when added to the interim dividend of 8.5cps, brings the total dividend for
the year to 21.0cps, an increase of 5.00% over last year's total dividend of
20.00cps.

The final dividend will be paid on 31 March 2020. The share register will
close to determine entitlements to the dividend at 5pm on 23 March 2020.

Monday 16 March 2020
Contact for enquiries:

Rod Duke
Group Managing Director
Tel: + 64 9 815 3737
End CA:00350004 For:BGP Type:FLLYR Time:2020-03-16 13:37:17

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